4 ms·

Not relevant to this discussion. But has anyone noticed that we only ever say "correction" to mean "going down". Has their been a period or an asset class in r

• edrxty 5y ago
  It happens all the time when you get into certain verticals, it's just that humans are generally more likely overvalue assets than undervalue them and the broader "stock market" is the grandest of all overvalued assets
• rr808 5y ago
  You're right correction is a euphemism to sound better than loss. It implies stocks will continue to go up in the medium/long term, which isn't always the case esp for tech stocks. Another recent euphemism is volatility. You didn't just lose 25k you just experienced some "volatility".
• amurthy1 5y ago
  Reminds me of my last job when an unexpected 1% drop in our team's primary goal metric would trigger VPs and directors to have us launch a full investigation into potential causes. But a similar unexpected increase, no one would bat an eye. Similarly in the stock market, when things are going poorly, people are eager to understand what happened, so a "correction" is a comforting explanation that the underlying asset is still solid and it's just market dynamics at play. But when the stock markets go up unexpectedly, people are generally happy to accept their good fortune without thinking too much about it.
  • bgroat 5y ago
    I think you and u/rreo8 have it. It's away to suggest control even in a loss
• jbay808 5y ago
  I'd guess that precious metals investors would say that they're awaiting a correction (to the upside) in gold prices, if it weren't for the confusion that that would cause.
• totalZero 5y ago
  The canonical definition of a "correction" is a rapid 10% decline in market capitalization. I have some thoughts as to why. Equity markets tend to drift slowly higher when there is no new event or story taking place. This can be rationalized in many ways, but my personal explanation is that companies and industries tend to make money over time rather than overnight, and no news is good news in that environment. Valuations tend to pop higher on news about acquisitions or other big deals, as well as information injections about revenue and profit. But the concept of a "correction" implies that the prior price action did not align with the information in the market place. Due to the asymmetrical nature of human social behavior as well as the long bias in the equity market, that tends to be a downward force. I refer to asymmetry because humans react differently to a one-in-a-million disaster than to a one-in-a-million windfall. They communicate and feel differently about failures than successes. They more readily share their greatest joys than their mortal fears. Everyone likes a champion and everyone likes an underdog, but they are liked in different ways. Information travels and influences differently in good circumstances versus bad, so negative returns tend to be less frequent and more substantial in the equity space. Commodities don't work the same way. Shortages cause price spikes rather than crashes, and panic works to the upside rather than the downside. Yet commodity prices are often cyclical due to the dynamics of physical production, so the concept of a "correction" makes less sense due to an uneven natural trajectory in the uncorrected valuation.
• dredmorbius 5y ago
  The finance sector has a long history of deprecating loss terms. The US no longer has "depressions". Those used to be commonplace. Actually, the first term was "panic", That was gradually replaced with "depression". After the Great Depression (1929--1941), the term "recession" came into use. The Wikipedia list itself is titled "recessions": https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
  • andrewmcwatters 5y ago
    This isn’t true.
    • BizarroLand 5y ago
      That which is asserted without evidence can be dismissed without evidence